Correlation Between Playmates Toys and China Resources
Can any of the company-specific risk be diversified away by investing in both Playmates Toys and China Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Playmates Toys and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playmates Toys Limited and China Resources Beer, you can compare the effects of market volatilities on Playmates Toys and China Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Playmates Toys with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and China Resources.
Diversification Opportunities for Playmates Toys and China Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Playmates and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and Playmates Toys is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Playmates Toys Limited are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Playmates Toys i.e., Playmates Toys and China Resources go up and down completely randomly.
Pair Corralation between Playmates Toys and China Resources
Assuming the 90 days horizon Playmates Toys Limited is expected to generate 2.59 times more return on investment than China Resources. However, Playmates Toys is 2.59 times more volatile than China Resources Beer. It trades about 0.08 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.02 per unit of risk. If you would invest 1.28 in Playmates Toys Limited on October 27, 2024 and sell it today you would earn a total of 5.22 from holding Playmates Toys Limited or generate 407.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Playmates Toys Limited vs. China Resources Beer
Performance |
| Timeline |
| Playmates Toys |
| China Resources Beer |
Playmates Toys and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playmates Toys and China Resources
The main advantage of trading using opposite Playmates Toys and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys position performs unexpectedly, China Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Resources will offset losses from the drop in China Resources' long position.| Playmates Toys vs. Booking Holdings | Playmates Toys vs. Oriental Land Co | Playmates Toys vs. ANTA Sports Products | Playmates Toys vs. Li Ning Company |
| China Resources vs. Fomento Econmico Mexicano | China Resources vs. BUDWEISER BREWUNSPADR4 | China Resources vs. Molson Coors Brewing | China Resources vs. MOLSON RS BEVERAGE |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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